On tech & VC in China, Southeast Asia & beyond.

Once the biggest e-commerce company in Singapore, ezbuy has been on a downward spiral since Singles Day 2016, where it saw what was believed to be tens of thousands of orders not delivered to customers. The main reason orders did not reach customers was because it used too many manual processes. This can be seen by how they process orders – orders are collected and then placed on popular platforms such as Taobao in China.

For a company that has been around for close to seven years now, nothing much has changed, and there does not seem to have been any continuous improvement in its technology. Now, with the latest hiccup: its accounts (even new ones) are being actively blocked by a highly influential marketplace, it could spell the beginning of the end for the once thriving company. At its peak, it had presence in many countries including Indonesia and Australia. What does it teach us?

Technology may be expensive, but a must to invest in for the long run

In the early days of Lazada, there was no doubt that most processes were manually executed. However, like many companies in the region such as Grab, they had begun to ‘pull an Uber’. Incase you might disagree, Uber launched each city with only a handful of team members and they managed to scale their influence using technology and not manpower.

Although Uber may have heavily burned money to invest in technology, while its competitors focused on cheap manpower, it proved to be a sound long-term strategy to focus on technology.

Many investors or at least those who have tracked ezbuy, saw a lot of value it was adding and therefore invested. Ezbuy even attracted the likes of IDG Ventures and Vision Knight Capital. However, it is unfortunate that most of the money was invested into growing its business, but not securing it. As many investors put it: it was not built on sound technology.

Worse of all, it had an over-reliance (and a lot of trust) on its capability to continuously buy directly on the platforms of the Chinese marketplaces. Instead, it should have built its capability further by having a platform that would enable it to be completely independent off such marketplaces. It was always known that Chinese businesses are extremely competitive, and ezbuy should not have expected them to play like gentlemen if they felt ezbuy were beginning to get too big.

Don’t laugh, it may be you next

We all may be prone to laughing or scorning at others’ failures – schadenfreude as the Germans call it. However, this lesson is best learnt quickly by examining your business (if you have one), and how you might be held hostage by your under-investment in technology – or your over reliance in someone else’s. For investors, it is time to take a closer look at your portfolio companies and understand the underlying technologies better before you commit further investment dollars into it.

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Thanks for reading The Lowdown, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at hello@mworks.asia and let us know how we can help.